HKMA launches quantum readiness and cybersecurity projects for banks in AI era

Hong Kong’s banking regulator has unveiled four flagship projects, including a quantum computing readiness index, to help the city’s lenders stay competitive and secure in the artificial intelligence era. The Hong Kong Monetary Authority (HKMA) said the initiatives formed part of its new Fintech Promotion Blueprint, aimed at guiding responsible innovation and preparing the city’s banking sector for rapid technological change. The blueprint was announced on Tuesday in response to industry concerns about risks accompanying the adoption of advanced technologies. “Computing equals productivity now,” said Arthur Yuen Kwok-hang, deputy chief executive of the HKMA. “But we can’t sacrifice security while making innovations.” The four projects, which the HKMA will launch in the coming months, are Quantum Preparedness Index, New Risk Data Strategy, Fintech Cybersecurity Baseline, and Supporting Competency Development. The quantum index comes as the technology is expected to solve complex problems within seconds, though in theory it may also undermine current encryption methods used for data protection and online authentication. Although experts estimated it would take five to six years for quantum computing to reach the scale needed to break encryption, it was important to prepare now, said Carmen Chu Lap-kiu, executive director of banking supervision at the city’s de facto central bank. The index would assess the industry’s readiness for quantum and post-quantum capabilities, set a quantitative target and provide practical guidance, the HKMA said. The measure aimed to protect customers from security risks in the quantum era while leveraging technology to enhance services such as real-time fraud detection and market analyses. While no commercial bank had yet adopted post-quantum cryptography, 53 per cent of banks anticipated using quantum computing by 2028, according to the HKMA’s industry communications. The regulator plans to release the first edition of the index in the second half of the year and review it every one to two years. New Risk Data Strategy will address issues like poor-quality risk data, which hinders advanced fintech applications. The HKMA said it would build a more mature data ecosystem, share best practices in risk data governance and promote the use of cutting-edge data technologies. Fintech Cybersecurity Baseline will be industry-led, helping fintech companies integrate requirements into their adoption of emerging technologies like agentic artificial intelligence and distributed ledger technology (DLT) smart contract services. The HKMA emphasised the importance of preparing banking practitioners for the future, saying it expected not only technical talent but also competent general fintech users to adopt AI and DLT solutions. The regulator said it would work with the sector to provide guidance to enhance staff skills, including seamless “human-machine interactions” expected in next-generation financial products and services. Yuen said the four projects would be launched together as soon as possible to achieve fintech goals by 2030. For smaller banks, the initiatives could lower barriers to adopting new technologies and narrow the gap with global leaders. The HKMA also expected the measures to assist small and medium-sized enterprises secure loans by improving data quality, which Yuen described as their biggest problem.